Royal Mail Staff Vote in Favor of Strike Action Over IPO

By Kari Lundgren -
Oct 16, 2013

Royal Mail Group Ltd. workers voted
for strike action less than a week after the U.K. postal
service’s 1.7 billion pound ($2.72 billion) initial public
offering, which unions say will put jobs at risk.

Some 78 percent of respondents backed a walkout, which will
take place on Nov. 4 unless a deal safeguarding employment is
reached before then, the Communication Workers Union said in a
statement today. The vote attracted a 63 percent turnout of
112,000 Royal Mail (RYE) workers, the labor group said in a statement.

Royal Mail shares, sold to investors for 330 pence in the
U.K.’s biggest state asset sale since British Rail was broken up
in the 1990s, have climbed 44 percent to 473.75 pence since the
company’s Oct. 11 trading debut. The IPO sparked a public spat,
with the opposition Labour Party querying the management of the
sale given the sharpness of the gain, and many union members
vocally opposing privatization of a profitable business.

“Postal workers have spoken very clearly that they care
about their jobs, terms and conditions far more than they care
about shares,” CWU Deputy General Secretary David Ward said in
the release, referring to stock that’s been allocated to staff
for free. “Postal workers will not be the people who pay for
the profits of private operators and faceless shareholders.”

Cameron Response

One of the country’s largest employers with more than
150,000 staff, 360-year-old Royal Mail has shifted away from
letters to package shipping spurred by a trend toward web-based
purchasing. The company’s rivals include TNT Express NV (TNTE) of the
Netherlands and Deutsche Post AG (DPW)’s DHL Express.

Prime Minister David Cameron “hopes that industrial action
won’t go ahead,” the premier’s spokesman, Jean-Christophe Gray,
told reporters in London. “It isn’t necessary; it should be
talks and not strikes to resolve issues.”

The postal service has a 53 percent share of U.K. parcel
deliveries and reported revenue of about 9.1 billion pounds in
fiscal 2013. Its operating profit, after some costs, was 440
million pounds.

Workers want guarantees preventing a further breakup of
Royal Mail and franchising of offices and delivery routes. The
CWU also wants measures to limit part-time working and warned
against the introduction of two-tier employment contracts that
could introduce cheaper employees under different terms.

Binding Contract

“Any action, or the threat of disruption, is damaging to
our business, especially in the run up to Christmas, our busiest
time,” Royal Mail said in a statement. The company said it has
offered the union a three-year legally-binding and enforceable
contract, as well as an 8.6 percent increase in salary,
allowances and overtime payments during that period.

Royal Mail’s IPO was the largest in Europe since April
2011, when Glencore Xstrata Plc (GLEN) raised $10 billion in its London
listing, according to data compiled by Bloomberg. The sale of
the postal service was fully subscribed within hours of opening
on Sept. 27.